Ripple CEO Brad Garlinghouse Talks Bitcoin, Banks, and Payments

Despite the perception that high-flying startup Ripple is either a blockchain or cryptocurrency company, CEO Brad Garlinghouse believes it’s something simpler and not merely a business trying to latch onto the latest tech buzzwords.

“We are a payments company,” Garlinghouse said on stage Tuesday at a Goldman Sachs(gs) technology conference in San Francisco.

He explained that Ripple uses blockchain technology—one of the underlying accounting technologies used for Bitcoin—to record transactions between banks. And he said that his company uses its own XRP cryptocurrency as a payment method to make it easier for banks to move money internationally.

The hope is that major banks will use Ripple’s xCurrent payment software and related XRP crytocurrency instead of the industry standard SWIFT software to transfer money across borders. Unlike some cryptocurrency advocates, Garlinghouse believes the best way to bring cryptocurrency to the mainstream is to “work within the system” as opposed to using cryptocurrency to circumvent government regulation and financial institutions.

“While contrarian and unpopular in the crypto space, in retrospect it’s very smart,” Garlinghouse said.

He compared the proliferation of crytocurrencies like XRP and Bitcoin to the advent of different kinds of databases, rather than “one database to rule them all.’ Most of these digital currencies will die out, he says, because it’s unclear what problem they solve.

He contrasted Bitcoin with XRP by saying that the typical Bitcoin transaction costs users around $13 and takes three to four hours to complete, making Bitcoin ill-suited to solve the payments problem between banks. In contrast, XRP “is about 1,000 times faster than a Bitcoin transaction” and costs “a fraction of a cent.”

For Ripple to grow, it needs large banks to buy its payment software and use its XRP cryptocurrency, a major challenge considering it must convince financial institutions to change how they’ve been doing business for years. The biggest obstacle in convincing banks to use Ripple’s services is that many banks have other IT-related projects that are a greater priority to them than Ripple, Garlinghouse said.

When asked whether the large banks will eventually accept cryptocurrencies, Garlinghouse voiced optimism but gave no specific time frame. He said he discussed the matter with senior executives at unspecified investment funds about trading cryptocurrencies and that it could take more than six months, possibly even later than 2019.

“Despite the prognostication of Jaime Dimon, this is an asset class that I don’t think is going away anytime soon,” Garlinghouse said, referring to the JPMorgan Chase CEO negative comments about Bitcoin earlier this year.

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